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37 UCLA L. Rev. 693 (1989-1990)
The Leasing Monopolist

handle is hein.journals/uclalr37 and id is 707 raw text is: THE LEASING MONOPOLIST John Shepard Wiley Jr.* Eric Rasmusen** J. Mark Ramseyer*** INTRODUCTION Antitrust law regulates the behavior of monopolists by brand- ing some acts as bad conduct. To define this key notion, every antitrust casebook includes the United Shoe Machinery decision, a classic district court opinion that condemned a monopoly firm's practice of only leasing and never selling its shoe manufacturing equipment.' The Supreme Court has never questioned its approval of the case, and Shoe has provided the authority for later and suc- cessful government attacks on leasing policies in the computer and copier markets.2 Nonetheless, because the Shoe court never cor- * Professor of Law, University of California, Los Angeles; A.B. 1975, University of California, Davis; M.A. 1980, University of California, Berkeley; J.D. 1980, Univer- sity of California, Berkeley. ** Assistant Professor of Business Economics, Anderson Graduate School of Management, University of California, Los Angeles; B.A. 1980, M.A. 1980, Yale Uni- versity; Ph.D. 1984, Massachusetts Institute of Technology. *** Professor of Law, University of California, Los Angeles; B.A. 1976, Goshen College; A.M. 1978, University of Michigan; J.D. 1982, Harvard University. We thank Stephen Breyer, William Comanor, Frank Easterbrook, Franklin Fisher, William Klein, Thomas Krattenmaker, and Stanley Ornstein for helpful comments. Copyright 1990 Wiley, Rasmusen, and Ramseyer. 1. United States v. United Shoe Mach. Corp., 110 F. Supp. 295 (D. Mass..1953), aff'd, 347 U.S. 521 (1954). 2. For example, in 1956 IBM complied with a Justice Department consent decree requiring it to offer its computers for sale. Nonetheless, most consumers continued to rent. See J. SOMA, THE COMPUTER INDUSTRY 35, 61-62 (1976). The Department of Justice again attacked IBM's rental policies in a suit that the Reagan administration eventually dismissed. See F. FISHER, J. McGOWAN & J. GREENWOOD, FOLDED, SPIN- DLED, AND MUTILATED: ECONOMIC ANALYSIS AND US. P. IBM 191-96 (1983). In 1975, the Federal Trade Commission entered a consent decree with Xerox that declared that the firm had followed a lease only policy that was among its violations of federal antitrust law. In re Xerox Corp., 86 F.T.C. 364, 367-68 (1975) Cf. United States v.

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